The Lowdown on MNO’s Data Overages

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Perhaps you remember those halcyon days of a decade or so ago when SmartPhones were attempting to gain market penetration and cellular carriers (Mobile Network Operators or MNOs) like AT&T were offering “lifetime unlimited” data when they had plenty of network capacity. Let’s hope you were prescient enough to take advantage of these plans; most consumers weren’t. Back then most wireless usage was voice. Today it’s data, with LTE networks designed to carry data ruling the spectrum. As a result, cellular airwaves are jammed with usage by wireless devices such as SmartPhones and tablets. You’re streaming sports, your wife is watching Netflix and your kids are brain-locked into online games like Pokémon Go and Mobile Strike. All of these apps on your family’s mobile devices consume massive amounts of data over a month’s time. Is it any wonder there are exorbitant data overage charges hoisted on the consumer by cellular carriers? Even when they say they offer “unlimited” data plans?

The Limitations of “Unlimited” Data Plans

As my colleague Karen Hendry reported here recently, mobile wireless reseller MVNOs often offer flexible data usage plans which usually cost less than the big 4 MNOs (Verizon, AT&T, Sprint, T-Mobile). For complete control over data usage, consider a pre-paid plan like those offered from MVNOs TracFone or Straight Talk. Once you exhaust your minutes or reach your data cap, merely re-up with your carrier. But beware of the limitations of carriers’ “unlimited” plans; your conception of “unlimited” will no doubt vary from that of your provider. For example, Straight Talk’s “unlimited” plan, similar to that of other cellular carriers, offers 5 GB of data at LTE speeds then throttles down to 64 Kbps, which are 2G or dialup speeds. Downloading a 5 Mb file at 64 Kbps takes 10-12 minutes, so forget video streaming or using any data application other than texting or very slow web browsing, which may turn to frozen molasses if the website enables dozens of javascript files, as is the case with many websites these days.

There are literally hundreds of MVNOs in the U.S., so space doesn’t allow a truly comprehensive overview of the terms and costs associated with data overages from every plan from every wireless carrier. Instead, we’ll focus on wireless plans offered by the Big 4 MNOs to compare and contrast how data overages affect your bottom line. With mobile wireless service as competitive as any business there is, during the past few years some companies have become more consumer-friendly and less iron-fisted with data overages. Roughly speaking, the divide falls between the two larger carriers — Verizon and AT&T compared with T-Mobile and Sprint — with regard to liberalized overage policies.

T-Hanks T-Mobile

If any one person in the industry is responsible for how wireless carriers now deal with overage charges, it’s T-Mobile CEO John Legere. Rather than making consumers choose between data plans bigger than they need or risking extra fees when surpass their plan allotment, Legere has used the power of competition to compel all four MNOs to make major overhauls with how they deal with plan data overages. As he pointed out in October 2015, “(Overages) rake in… $1.5 billion every year” for carriers, which doesn’t include subscribers paying for supersized plans they don’t need to avert the possibility of data overage charges.

T-Mobile started the trend away from overage charges in 2014 with its “Simple Choice” plans by introducing “unlimited talk and text” when paying for an allocation of high-speed data. Should the subscriber consume his allotment for the month, he has the option of buying more data or continue at greatly throttled speeds. This arrangement has become more or less de riguer among the four MNOs. The “Simple Choice” plans have now been grandfathered in lieu of T-Mobile’s “One” plan, offering unlimited high speed data at scaling lower cost per line, e.g., a ~30% discount for the second line and ~70% discount for each additional line up to eight — as long as autopay is enabled. One further restriction: T-Mobile specifies that “customers who use more than 97% of our customers (currently over 26 GB per month) will have their usage prioritized below other traffic and many notice slower speeds.”

The bottom line? T-Mobile data plans are now (almost) all-unlimited.

Drop Dead, Big Red

You’ll be relieved (hopefully our readers recognize sarcasm when they see it) to know that Big Red now advertises “No More ‘Surprise’ Overages'”! With plans from 2 Gbps per month to a whopping 100 Gig monthly, Verizon covers data usage needs for subscribers both big and small. Earlier this year the company enlarged data allowances for all its plans, which of course came with higher prices for the increased allotment. Similarly to the other MNOs, Verizon allows a limited one-month rollover for unused data for, God love ’em, no extra charge. But their “Safety Mode” option is available for only the more expensive plans. It originally came with a $5 monthly surcharge (now since rescinded) and throttles back speeds to 128 Kbps. While it may be twice as fast as 64 Kbps mentioned above with Straight Talk, it’s still… so… slow….

On the other hand, you’ll be aghast to read about Verizon overage horror stories. This summer, for example, a Cleveland, Ohio non-profit received a $20,300 bill from Verizon for 1.3 TB(!) of data usage. The account served 49 phones and iPads but Verizon pinned the blame on just one phone over a 10 day period. 1.3 TB of data usage over that interval on a SmartPhone sounds almost impossible, and it is. It could happen if someone streamed UHD content from Netflix for 19 hours a day for 10 days but even HD content for 24 hours per day for 10 days would consume “merely” 720 GB. In September 2016 Verizon customer filed over 2,000 billing complaints with the FCC, up from only 168 in August. It’s tales like these that call how Verizon meters ISP data usage into question.

As Motley Fool contributor Daniel Kline writes, “Verizon seems like the wireless carrier that most wants to cling to overage charges.” Why? Because Verizon customers on existing plans must migrate to an updated plan to get the no-overage option. So should you like your legacy Verizon plan, remember you must carefully monitor usage to prevent overages.

This YouTube video from a Verizon store owner in northeast Ohio shows Android users how to take charge of background app usage:

To Sprint, or Not to Sprint

Long the carrier of choice for most MVNOs, Sprint has its “Unlimited Freedom” plan, similar to the “One” plan T-Mobile offers. But unlike its rivals, Sprint retains the legacy “Family Plans,” which feature shared data allocations yet incorporate the option of throttling data once the monthly threshold has been reached or else sell the subscriber more data at per-GBps increments. Like T-Mobile, Sprint “prioritizes” bandwidth allocation for heavy users. In the case of both Sprint and T-Mobile, the threshold is 23 GB per month and, according to the company, affects only 3% of its customer base.

What’s more, Sprint now has the “Unlimited Freedom Premium” plan, which tacitly alerts the consumer that the previous “Unlimited Freedom” plan had limits, and so does Premium. The verge.com’s Jacob Kastrenakes explains that “rather than limiting you to low-res 480p video streams, the Premium plan allows unlimited streaming at 1080p. It also bumps music quality streaming from 500 kbps to 1.5 Mbps, and gaming from 2 Mbps up to 8 Mbps.” While it’s a step toward “unlimited” data, it still restricts users from streaming UHD videos and gamers will fume over the 8 Mbps throttle.

The verdict? Consumers must choose between plans that have smaller data allotments without built-in restrictions or opt for one that has restrictions, e.g., “endless” but not “unlimited” data.

Beware the Death Star

Way back in the day AT&T had a number of grandfathered “unlimited plans” but now they’re only available to customers who bundle their mobile usage with a DirecTV subscription. In a sop to consumers irate about overages, the carrier does have its “Mobile Share Advantage” plan, available alongside the “Mobile Share Value” plan. In typical AT&T fashion, terms and conditions are murky but the company offers its own take on its products: “If you have 2 smartphone lines on a current Mobile Share Value 5GB plan for $100 per month, you can now get the new Mobile Share Advantage 6GB plan – 1 additional GB of data for the same price, plus no overages. If you need more data, for $20 more a month, you can get 10GB of data.” Savvy consumers are not impressed as the move is essentially a rate increase; AT&T (as usual) here makes no mention of the line access per device cost.

Apparently only the “Mobile Share Advantage” plan is offered to new subscribers, which introduces throttled speeds after the plan’s data allocation is exhausted. But the catch — and it always seems that AT&T has a catch no matter what they offer — is that their new plans are “opt-in.” Thus, legacy customers are obliged to switch plans to get overage protection. You like your previous data plan except for the risk of overages? Too bad, and this is the main divide between Verizon/AT&T and T-Mobile/Sprint — the former makes subscribers change plans for overage protection while the latter offer overage protection for legacy plans. Note that unlike T-Mobile and Sprint, the throttle threshold for AT&T “unlimited” data plans is 22 GB per month. And like Big Red, the Death Star throttles speeds back to 128 Kbps once a plan’s cap limits have been reached, or the subscriber can divvy up $20+ for an extra 10 GB of data.

Coda

Back in 2012 in a case of man bites dog, an AT&T mobile subscriber in California took the carrier to small claims court and won an $850 judgment against the Death Star for throttling back his data usage on an “unlimited” plan.

Pro-tem Judge Russel Nadel in Simi Valley’s Ventura Superior Court ruled that AT&T was unfair in promising the plaintiff “unlimited” data when he bought the phone “while burying terms in his contract that give the company the right to cut down speeds.” Predictably — as the case could potentially impact millions of subscribers, AT&T vowed to appeal.